Slowly slowly with each episode, Ajay Shah and Amit Verma is changing how I think about the world! Teaching me to think from the first principles and question everything even the fundamentals. Thank you so much. ❤
45:30 "There are cheaper ways to do propaganda. You could just fund a cricket team or something. ...hire a visual effects team and claim you sent a craft to the moon." My god. Ajay on fire XD
Can you please make an episode regarding how to increase our english vocabulary and how relearn the facets of english grammar? Also do provide some resources regarding vocabulary and grammar that can play a role in our everyday and work life. Thank you
My 0.02$: 1. I think of State's spending on innovation with a lot more kindness than Amit does. Guellec and Potterie has given some evidence that a $1 of public investment draws $0.7 of private investment in R&D. Bloom has documented this same effect to be in the range of $0.3-$0.4, greater filing of patents, and greater increase in labor productivity. If we consider growth as a good thing (which I do!), then public spending works by crowding in private energies into a problem area, and solving it. My intuition says, that there is a tipping point to the problem. Most scientific progress follow a "hockey-stick" graph, and it feels that somethings materially change around the inflexion point. The goal is to reach that inflexion point quickly, or as quickly as constraints will allow. 2. I also think Indian State should invest in R&D, and quite heavily so. This series (and I agree), makes a strong case for the State to ignore everything else, and focus on market failures. Current Indian State does a lot, lot more than focus only on market failures. This is the state of the world that we live in. The question is, given this baseline of 'taxation violence' can we achieve better outcomes? I argue yes - there is significant scope of prioritizing R&D by doing away with wasteful subsidies - like fertilizer, food, BSNL grant of INR 60,000cr, subsidies to OMCs. Heck a simple back of the envelope calculation says, restructuring NHAI's debt will relive about $3b of annual interest outgo. I consider R&D is the best place to park this. Even meeting the annual divestment goals will release enough $$. So yes, in the currenrt scheme of things - there is a strong case for R&D - if we are to focus away from wasteful expenditures. We ought to remember, a $3b public spending in R&D, is really $5.1b total spending. So we do get a lot of bang for buck! 3. The Huntville episode confirms my bias that people essentially are marionettes and puttys. They are shaped by their environment as opposed to their will. There is no triumph of the will, just the shape of the locale you are put against. Same scientists in Nazi Germany go crazy Sieg Heiling, and when in Huntsville, Alabama, go crazy creating scientific knowledge. All the more reason that we as Indians think of how we can create such an environment for our eclectic thinkers.
On your #1 : why do we believe that such numbers carry forth into the Indian context? If some employees of ISRO got a craft to the moon spending Rs.1 taken from taxpayers, are we convinced the gains to India are over Rs.3? Or is it just propaganda victories in which case there are cheaper solutions. The main idea of this episode (and the adjacent paper) is to start on a 20 year journey so that government spending on r&d impinges upon the people. Make India great, not "make the Indian state great".
@@ajayshah5705 The context which I missed out on mentioning on #1 is "in the precense of high spillover environment". $0.7 incremental private investment doesn't happen because public investment influences private choices. It happens in the context of "Buy" environment. A sort of viability gap funding, so to speak. (I have a permanent gripe about all kinds of interesting material engineering happening in state PSUs but not getting socialized.)
Hi :) Would like some examples of the "buy" model of operations from Japan and South Korea too! Will definitely read the paper shared in the podcast. Thanks for the wonderful examples and episode.
Brilliant as usual, Ajay and Amit! You clearly articulated why innovation requires state allocation due to market failures arising from elements of public goods. You then discussed minimizing agency conflict in state allocation by opting to "buy" rather than "make" whenever possible, which will also maximize beneficial externalities. In theory, this is all well and good. However, the concept of "public good" is quite stretchable and many competitors may qualify. Optimizing this decision requires enlightened leadership. Unfortunately, our political leadership is ignorant, embroiled in mega conflicts, and our bureaucratic leadership is half-literate and plagued by petty conflicts. This results in ideas clashing rather than competing.
Digital Public Good was yet another brilliant episode. I had always viewed UPI as a potential threat due to the clear possibility of state control at this choke point. However, you introduced another dimension: its inferior utility design. Since it lacked elements of a public good, it should have been left to the private sector to develop in a more innovative manner, both now and in the future.
Also, UPI is only available to those with Indian bank accounts and an Indian mobile number (though a few other countries are now included). NRIs on short visits to India who do not have Indian mobile numbers are significantly disadvantaged. They cannot use UPI, and most vendors do not accept cash. As a result, they end up paying INR 500 notes even for expenses of INR 200, as vendors lack the change to return. This situation might have been mitigated if there were competing service providers.
Hi Amit, I have not finished watching this episode yet, and only halfway through it. I don't think the IITs were an elitist project. There were two things that happened after the IITs were set up. One was that the knowledge economy changed. Engineering, and analytical skills became sought after with possibilities of plush salaries and potential immigration opportunities. This brought in a type of elites and castes that took advantage of the IIT system. The second was that, there were not many state institutes that came up with the values and the institutional setup that IITs had. This led to people considering IITs as 'islands of excellence' etc. A big problem with the `knowledge society' is that other state universities have since become political battlegrounds. One of my colleagues at IITM, Ronald Wittje a science historian spent some time in the archives to contend that when IITM was setup it was with a vocational focus ... something like what the German institutes had at that time. Of course, things changed after that. The government should certainly spend more on quality school education to empower the citizens, but higher education is also important.
Great episode with lots of food for thought! While I overall agree with "buy not make" in the current stage of India's growth journey, it's worth noting defense contracting is a can of worms of its own. Military and defense cannot/will not be a true free market, given its sole customer being the state itself. This ends up with defense contractors focusing less on innovation, and more on rent-seeking and lobbying. They become a pseudo-arm of the govt, with almost all their revenue being from taxpayer money, without any of the public accountability (see: Lockheed Martin, Northrop Grumman). Maybe there is no good solution to this, and it's just a pathology of the defense industry?
Two unrelated comments. The choice being debated here is not between private defence contractors that deliver private competitive levels of innovation. The choice is between private defence contractors vs. PSUs. Yes, contracting for defence is hard, and that's a skill to be developed. In this paper (innovation policy) the late part of the paper is the concrete policy work on how to make this kind of government contracting work. On India + military, please see EiE episode 31.
Amit's skepticism is understandable. Can we set up an organization with a 50-year plan in the future and run purely as a BUY option? Contracting capabilities, like drafting contracts, we may master but we will not be able to avoid cronyism and we can not fix accountability. As such for such projects, we require people of impeccable integrity who are above board and need not be accountable. Their presence itself is a guarantee for success. I think we have such people. How do we find them?
Great discussion as always! What do you think is the role of patents, when governments use the buy-side pathway? For eg: Much of the fundamental research that underpinned the covid vaccines came from publicly funded research. Is it then fair to allow private companies to get exclusive rights to technologies that come out of such research? This feels like a particularly relevant question to discuss especially in fields such as healthcare.
@amitvarma - given your strong objection to India landing things on the moon😀, this poem/song is quite relevant - th-cam.com/video/goh2x_G0ct4/w-d-xo.html
One point not discussed is whether the NASA contract model if replicated in India would lead to a much higher cost of projects compared to current ISRO.
Key insight: If the objective is posed as the Indian state, using taxpayer money, and putting a craft on the moon, it's hard to justify the money. The objective should be posed as : the Indian state, using taxpayer money, inducing greater knowledge in the Indian society. Exotic knowledge within vertical state organisations is not much useful for India.
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Slowly slowly with each episode, Ajay Shah and Amit Verma is changing how I think about the world! Teaching me to think from the first principles and question everything even the fundamentals.
Thank you so much. ❤
The emphasis on Freedom is very interesting
I am just addicted to this podcast , how do you do this ?
Same here
Gem of a episode.
India is lucky to have brilliant minds like Ajay Shah and Amit Varma
The bar of this show is going UP UP and UP thanks to these two gentlemen.
45:30 "There are cheaper ways to do propaganda. You could just fund a cricket team or something. ...hire a visual effects team and claim you sent a craft to the moon." My god. Ajay on fire XD
The Huntsville, Alabama story was truly fascinating!
Can you please make an episode regarding how to increase our english vocabulary and how relearn the facets of english grammar? Also do provide some resources regarding vocabulary and grammar that can play a role in our everyday and work life. Thank you
The examples clarified this discussion quite well.
Fantastic!
Entrepreneurial State by Mazzucato is an excellent book on the role of the state in innovation.
Nag Panchami special!
Thanks for this.
My 0.02$:
1. I think of State's spending on innovation with a lot more kindness than Amit does. Guellec and Potterie has given some evidence that a $1 of public investment draws $0.7 of private investment in R&D. Bloom has documented this same effect to be in the range of $0.3-$0.4, greater filing of patents, and greater increase in labor productivity. If we consider growth as a good thing (which I do!), then public spending works by crowding in private energies into a problem area, and solving it.
My intuition says, that there is a tipping point to the problem. Most scientific progress follow a "hockey-stick" graph, and it feels that somethings materially change around the inflexion point. The goal is to reach that inflexion point quickly, or as quickly as constraints will allow.
2. I also think Indian State should invest in R&D, and quite heavily so. This series (and I agree), makes a strong case for the State to ignore everything else, and focus on market failures. Current Indian State does a lot, lot more than focus only on market failures. This is the state of the world that we live in. The question is, given this baseline of 'taxation violence' can we achieve better outcomes? I argue yes - there is significant scope of prioritizing R&D by doing away with wasteful subsidies - like fertilizer, food, BSNL grant of INR 60,000cr, subsidies to OMCs. Heck a simple back of the envelope calculation says, restructuring NHAI's debt will relive about $3b of annual interest outgo. I consider R&D is the best place to park this. Even meeting the annual divestment goals will release enough $$.
So yes, in the currenrt scheme of things - there is a strong case for R&D - if we are to focus away from wasteful expenditures. We ought to remember, a $3b public spending in R&D, is really $5.1b total spending. So we do get a lot of bang for buck!
3. The Huntville episode confirms my bias that people essentially are marionettes and puttys. They are shaped by their environment as opposed to their will. There is no triumph of the will, just the shape of the locale you are put against. Same scientists in Nazi Germany go crazy Sieg Heiling, and when in Huntsville, Alabama, go crazy creating scientific knowledge. All the more reason that we as Indians think of how we can create such an environment for our eclectic thinkers.
On your #1 : why do we believe that such numbers carry forth into the Indian context? If some employees of ISRO got a craft to the moon spending Rs.1 taken from taxpayers, are we convinced the gains to India are over Rs.3? Or is it just propaganda victories in which case there are cheaper solutions.
The main idea of this episode (and the adjacent paper) is to start on a 20 year journey so that government spending on r&d impinges upon the people. Make India great, not "make the Indian state great".
@@ajayshah5705 The context which I missed out on mentioning on #1 is "in the precense of high spillover environment". $0.7 incremental private investment doesn't happen because public investment influences private choices. It happens in the context of "Buy" environment. A sort of viability gap funding, so to speak.
(I have a permanent gripe about all kinds of interesting material engineering happening in state PSUs but not getting socialized.)
Hi :)
Would like some examples of the "buy" model of operations from Japan and South Korea too! Will definitely read the paper shared in the podcast. Thanks for the wonderful examples and episode.
Brilliant as usual, Ajay and Amit!
You clearly articulated why innovation requires state allocation due to market failures arising from elements of public goods. You then discussed minimizing agency conflict in state allocation by opting to "buy" rather than "make" whenever possible, which will also maximize beneficial externalities.
In theory, this is all well and good. However, the concept of "public good" is quite stretchable and many competitors may qualify. Optimizing this decision requires enlightened leadership. Unfortunately, our political leadership is ignorant, embroiled in mega conflicts, and our bureaucratic leadership is half-literate and plagued by petty conflicts. This results in ideas clashing rather than competing.
We hope that through enough episodes of EiE, e.g. digital public goods or vaccines, you will see that the term Public Good can be made precise.
Digital Public Good was yet another brilliant episode. I had always viewed UPI as a potential threat due to the clear possibility of state control at this choke point. However, you introduced another dimension: its inferior utility design. Since it lacked elements of a public good, it should have been left to the private sector to develop in a more innovative manner, both now and in the future.
Also, UPI is only available to those with Indian bank accounts and an Indian mobile number (though a few other countries are now included). NRIs on short visits to India who do not have Indian mobile numbers are significantly disadvantaged. They cannot use UPI, and most vendors do not accept cash. As a result, they end up paying INR 500 notes even for expenses of INR 200, as vendors lack the change to return. This situation might have been mitigated if there were competing service providers.
Fascinated by a book shelf in the background. Wonder what kind of books are there???try to read the names but failed😊
Hi Amit,
I have not finished watching this episode yet, and only halfway through it. I don't think the IITs were an elitist project. There were two things that happened after the IITs were set up. One was that the knowledge economy changed. Engineering, and analytical skills became sought after with possibilities of plush salaries and potential immigration opportunities. This brought in a type of elites and castes that took advantage of the IIT system. The second was that, there were not many state institutes that came up with the values and the institutional setup that IITs had. This led to people considering IITs as 'islands of excellence' etc. A big problem with the `knowledge society' is that other state universities have since become political battlegrounds. One of my colleagues at IITM, Ronald Wittje a science historian spent some time in the archives to contend that when IITM was setup it was with a vocational focus ... something like what the German institutes had at that time. Of course, things changed after that. The government should certainly spend more on quality school education to empower the citizens, but higher education is also important.
Great episode with lots of food for thought! While I overall agree with "buy not make" in the current stage of India's growth journey, it's worth noting defense contracting is a can of worms of its own.
Military and defense cannot/will not be a true free market, given its sole customer being the state itself. This ends up with defense contractors focusing less on innovation, and more on rent-seeking and lobbying. They become a pseudo-arm of the govt, with almost all their revenue being from taxpayer money, without any of the public accountability (see: Lockheed Martin, Northrop Grumman).
Maybe there is no good solution to this, and it's just a pathology of the defense industry?
Two unrelated comments.
The choice being debated here is not between private defence contractors that deliver private competitive levels of innovation. The choice is between private defence contractors vs. PSUs. Yes, contracting for defence is hard, and that's a skill to be developed. In this paper (innovation policy) the late part of the paper is the concrete policy work on how to make this kind of government contracting work.
On India + military, please see EiE episode 31.
Amit's skepticism is understandable. Can we set up an organization with a 50-year plan in the future and run purely as a BUY option? Contracting capabilities, like drafting contracts, we may master but we will not be able to avoid cronyism and we can not fix accountability. As such for such projects, we require people of impeccable integrity who are above board and need not be accountable. Their presence itself is a guarantee for success. I think we have such people. How do we find them?
Sad is the land that needs heroes
If anyone wants to meet you two what can be done ? I live in Mumbai too..
Great discussion as always! What do you think is the role of patents, when governments use the buy-side pathway? For eg: Much of the fundamental research that underpinned the covid vaccines came from publicly funded research. Is it then fair to allow private companies to get exclusive rights to technologies that come out of such research? This feels like a particularly relevant question to discuss especially in fields such as healthcare.
It's a fair question. What is the optimal role for patents, this needs to be understood and debated.
Outdoors 😢
@amitvarma - given your strong objection to India landing things on the moon😀, this poem/song is quite relevant - th-cam.com/video/goh2x_G0ct4/w-d-xo.html
One point not discussed is whether the NASA contract model if replicated in India would lead to a much higher cost of projects compared to current ISRO.
Key insight: If the objective is posed as the Indian state, using taxpayer money, and putting a craft on the moon, it's hard to justify the money. The objective should be posed as : the Indian state, using taxpayer money, inducing greater knowledge in the Indian society. Exotic knowledge within vertical state organisations is not much useful for India.